KPI Meaning and How to Set Marketing KPIs (Examples)

KPI stands for Key Performance Indicator. It is the main metric you set in advance to judge, with a number, whether you are reaching a goal. In marketing, a KPI turns a goal like "increase sales" into a measurable figure with a deadline, such as "ad purchase conversion rate of 3%" or "cost per conversion of 20,000 KRW or less." A metric is any number you can measure. A KPI is the few metrics tied directly to a goal, with a target value attached.

How a KPI differs from a metric

Clicks, visitors, and ad spend are all metrics. You can have plenty of these numbers, but without a goal you have no standard for deciding whether things got better or worse. A KPI pairs one goal with one metric and one target value. If the goal is "acquire new members," the KPI might read "cost per sign-up completion of 15,000 KRW or less, within this month."

The numbers that sit next to a KPI and explain its cause can be called supporting metrics. When the conversion rate drops, checking whether the click-through rate stayed the same or visitors fell tells you whether the problem is the ad or the landing page. If you make every supporting metric a KPI, it becomes unclear what to fix.

Marketing KPI types and how to calculate them

The KPIs used most often in ad operations are click-through rate, conversion rate, cost per conversion, and ROAS. Here is what each one divides.

KPI	Calculation	What it tells you
Click-through rate (CTR)	Clicks ÷ impressions	Whether the ad catches attention
Conversion rate	Conversions ÷ ad interactions	Whether people who click go on to the target action
Cost per conversion (CPA)	Ad spend ÷ conversions	How much you spend per target action
ROAS	Conversion value (revenue) ÷ ad spend	How much revenue you earn for the ad spend

The Google Ads Help Center defines click-through rate as clicks divided by impressions, and explains conversion rate as the number of conversions divided by the number of ad interactions, shown as a percentage. The same help page notes that if you count multiple conversions, one interaction can record several conversions, so the conversion rate can exceed 100%. Cost per conversion appears in the target CPA bidding documentation as a setting for the average amount you want to pay per conversion. The actual value is ad spend divided by conversions. ROAS is conversion value divided by ad spend, and Google Ads calculates conversion value / cost as total conversion value ÷ total cost to estimate return on investment.

Let's calculate with a hypothetical example. With 10,000 impressions and 300 clicks, the click-through rate is 3%. If 15 of the 300 people who clicked made a purchase, the conversion rate is 5%. If ad spend was 150,000 KRW, the cost per conversion is 10,000 KRW. If the average purchase is 40,000 KRW, the conversion value is 600,000 KRW, and ROAS is 600,000 ÷ 150,000, which is 4, or 400% as a percentage. These numbers are assumptions chosen to show the calculation. They are not industry averages.

How to set marketing KPIs

Set KPIs by working backward from the goal statement. First write the result the business wants in one sentence. Then pick one metric that captures that result in numbers, and attach a target value and a time period. If you pick the metric first, an easy-to-inflate number like clicks becomes the KPI and drifts away from revenue.

1. Write the goal in one sentence. Example: increase new buyers on Smart Store (Naver's e-commerce store platform in Korea).
2. Pick the metric closest to the goal. If the goal is purchase count, look at conversion rate or cost per conversion. If it is revenue, look at ROAS. If it is awareness, look at impressions and click-through rate.
3. Attach a target value and a period. Example: cost per purchase conversion of 12,000 KRW or less this month. If you have results from the past 4 weeks, set the first value slightly better than that average.
4. Set a check cycle. If you decide on weekly checks for ads and monthly checks for site metrics, daily swings will not throw you off.

Here are representative KPIs by goal type.

Goal	Representative KPI	Supporting metrics to watch
Awareness	Impressions, reach	Click-through rate, video view rate
Driving visits	Cost per click, engagement rate	Visitors, bounce rate
Sign-ups and inquiries	Conversion rate, cost per conversion	Click-through rate, form drop-off step
Revenue	ROAS, cost per purchase conversion	Conversion rate, average order value

Use GA4 metrics to judge the quality of site visits. According to the Google Analytics help page, an engaged session is a session that lasts 10 seconds or longer, has a key event, or has 2 or more screen or page views, and bounce rate is the share of sessions that did not meet the engagement criteria.

Where to check KPIs in GA4

Actions that become KPIs, such as purchases or sign-ups, are only counted in GA4 if you mark them as key events. The Google help page describes a key event as an event that measures an action important to business success, and says any event you collect can be marked as a key event. After you mark it, you can see the number of occurrences by traffic source in the 'Key events' column of reports such as Landing page or User acquisition. In Explorations, you can build your own report with metrics such as 'Session key event rate'.

When you check, compare the same period. Put the KPI target next to this week's results. If you are off target, first work out in the supporting metrics whether the click-through rate changed or the conversion rate changed. The success standard is that the number in the KPI column is compared with the target value over the same period and with the same definition.

Common mistakes when setting KPIs

• Too many metrics: With ten KPIs, you cannot tell what matters. Cut it to 1 or 2 KPIs per goal and keep the rest as supporting metrics.
• No period on the target value: If you only write "conversion rate of 5%," no one knows by when. Write a monthly or quarterly period alongside it.
• Combining numbers that are defined differently by channel: According to Google's help page, Google Ads conversions do not appear in standard Analytics reports, and you check them separately in the advertising section. Within one report, compare numbers from a single source.
• Judging performance by clicks alone: If clicks rise but conversions do not, only ad spend rises. If the goal is revenue, make ROAS or cost per conversion the KPI.

Frequently asked questions

What is the difference between a KPI and a KGI?

A KGI (Key Goal Indicator) states the final goal as a number, such as "annual revenue of 1 billion KRW." A KPI is the metric that measures progress toward that goal. A number you check every month to reach the KGI, such as a monthly ad ROAS of 400%, is a KPI.

How many KPIs are appropriate?

One or two per goal is easy to read. If you keep the other numbers as supporting metrics for finding causes, the report does not get long.